Fair Labor Standards Act Revisions

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AGENDA

• A Flexible Spending Account overview
• How it works
• Health Care reimbursement account
• Dependent Care reimbursement account
• Important planning information
• Submitting claims for reimbursement
• 2009 Open Enrollment information
• Resources

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FLEXIBLE SPENDING ACCOUNT OVERVIEW

• Employer-sponsored plan
• Pre-tax payroll deductions deposited into the
  Flexible Spending Account
• Use these dollars for reimbursement of qualified
  out-of-pocket expenses
• Pay less taxes
• Increase your take-home pay
• Two kinds of accounts
• Health Care reimbursement account
• Dependent Care reimbursement account

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HEALTH CARE REIMBURSEMENT ACCOUNT OVERVIEW

• Reimbursement for qualified expenses
• IRS definition
• costs of diagnosis, cure, mitigation,
  treatment, or prevention of disease, and the
  costs for treatments affecting any part of the
  body. IRS Pub. 502
• Includes Medical, Dental, Prescription, Vision,
  Hearing, and Over-the-counter medications (under
  certain circumstances)

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HEALTH CARE REIMBURSEMENT ACCOUNT PROCESS

• Estimate annual out-of-pocket expenses not
  covered by insurance
• no minimum contribution per paycheck
• 5,000 maximum annual contribution
• Enroll in Flexible Spending Account in November
• Incur eligible out-of-pocket expenses in 2009
• File claims and receive reimbursement

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HEALTH CARE REIMBURSEMENT ACCOUNT SAMPLE EXPENSES

• Office visit co-pay
• Health care deductible
• Prescription co-pay
• Orthodontia expenses
• Prescription eyeglass and contact lenses
• Acupuncture
• Blood pressure monitor
• Hearing aids

• Over-the-counter medications (purchased to treat
  an existing or imminent medical condition)
• Allergy, cold, cough, flu, nasal, sinus
• Diabetic supplies
• Denture adhesive
• Sleeping aids
• Pain relievers, aspirin and non-aspirin

IRS Publication 502 Medical and Dental
Expenses www.irs.gov/pub/irs-pdf/p502.pdf
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HEALTH CARE REIMBURSEMENT ACCOUNT W. W. WILDCAT
EXPERIENCE

• Without FSA With FSA
• Annual Salary 30,000 30,000
• Office visits 150
• Prescription co-pays 500
• Dental deductibles 100
• Prescription glasses/contacts 600
• Over-the-counter medication 150
• Total out of pocket expenses 1,500
• Pre-tax deduction 0
  1,500
• Taxable Income 30,000 28,500
• Federal Income Tax 1,507
  1,345
• State Income Tax 347
  309
• Social Security (FICA) Tax 2,286
  2,162
• Total taxes 4,140
  3,816
• Net paycheck 25,860 24,684
• After-tax expenses 1,500
  0

324
Annual savings
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HEALTH CARE REIMBURSEMENT ACCOUNT W. W. WILDCAT
EXPERIENCE

• Without FSA With FSA
• Annual Salary 60,000 60,000
• Office visits 150
• Prescription co-pays 500
• Dental deductibles 100
• Prescription glasses/contacts 600
• Over-the-counter medication 150
• Total out of pocket expenses 1,500
• Pre-tax deduction 0
  1,500
• Taxable Income 60,000 58,500
• Federal Income Tax 5,976
  5,734
• State Income Tax 1,375 1,319
• Social Security (FICA) Tax 4,572
  4,448
• Total taxes 11,923 11,501
• Net paycheck 48,077 46,999
• After-tax expenses 1,500
  0

422
Annual savings
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DEPENDENT CARE REIMBURSEMENT ACCOUNT OVERVIEW

• Reimbursement for qualified dependent care
  expenses that are
• necessary to allow you to work or look for work
• necessary to allow your spouse to work, look for
  work, or be a full-time student
• Must have custody of dependent more than 50
  percent of the year
• Special considerations for UA Child Care Voucher
  Program, Sick Child Program and Emergency/Back-Up
  Care Program participants
• Employee out of pocket expenses and University
  contributions for these three pre-tax programs
  are included in the 5,000 annual maximum
• Consult your professional tax advisor
• Contact UA Life Work Connections, at 621-4365
  or visit http//lifework.arizona.edu/cc/

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DEPENDENT CARE REIMBURSEMENT ACCOUNT SAMPLE
EXPENSES

• Child care
• Nanny service
• Nursery school
• Elder care
• Expenses may be paid to a relative (child, parent
  or grandparent of participant) IF
• caregiver is not under age 19
• caregiver is not a tax dependent of the
  participant
• IRS Publication 503 Child and Dependent Care
  Expenses
• www.irs.gov/pub/irs-pdf/p503.pdf

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DEPENDENT CARE REIMBURSEMENT ACCOUNT W. W.
WILDCAT EXPERIENCE

• Without FSA With FSA
• Annual Salary 30,000 30,000
• Total dependent care expense 5,000
• Pre-tax deduction 0
  5,000
• Taxable Income 30,000 25,000
• Federal Income Tax 1,507
  966
• State Income Tax 347
  222
• Social Security (FICA) Tax 2,286
  1,872
• Total taxes 4,140 3,060
• Net paycheck 25,860 21,940
• After tax expenses 5,000
  0
• Actual take-home pay 20,860 21,940

1,080
Annual savings
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DEPENDENT CARE REIMBURSEMENT ACCOUNT W. W.
WILDCAT EXPERIENCE

• Without FSA With FSA
• Annual Salary 60,000 60,000
• Total dependent care expense 5,000
• Pre-tax deduction 0
  5,000
• Taxable Income 60,000 55,000
• Federal Income Tax 5,976
  5,165
• State Income Tax 1,375
  1,188
• Social Security (FICA) Tax 4,572
  4,158
• Total taxes 11,923 10,511
• Net paycheck 48,077 44,489
• After tax expenses 5,000
  0
• Actual take-home pay 43,077 44,489

1,412
Annual savings
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IMPORTANT PLANNING INFORMATION

• Use care when estimating expenses
• Be conservative
• Review, consider current year expenses
• Do you anticipate similar expenses for 2009?
• Use the worksheet
• Track expenses in 2009 for enrollment in 2010

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WHO IS ASI?

• Third party administrator
• Answers questions about this plan
• Receives, reviews and approves claims
• Sends reimbursement directly to you through
• Direct deposit
• Check mailed to your home address
• [phone]
• www.asiflex.com

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2009 OPEN ENROLLMENT

• November 1 30, 2008
• Effective January 1, 2009 through December 31,
  2009
• Enroll using Employee Link http//emplink.arizona.
  edu
• Current participants must re-enroll to ensure
  participation in 2009

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RESOURCES

• HR website (plan information)
• www.hr.arizona.edu
• Employee Link (to enroll)
• http//emplink.arizona.edu
• ASI (claims information)
• www.asiflex.com
• IRS Pub. 502 (medical/dental care)
• www.irs.gov/pub/irs-pdf/p502.pdf
• IRS Pub. 503 (dependent care)
• www.irs.gov/pub/irs-pdf/p503.pdf